Saturday June 6, 2020

Finances

Ollie's Reports Earnings

The company reported revenue of $349.4 million for the first quarter, up 7.5%, which exceeded Wall Street's expectations of $312.5 million. During the same period last year, revenue was $324.9 million.

"We are pleased with and proud of our first quarter performance in light of the challenges we faced from COVID-19 and the current economic backdrop," said Ollie's President and CEO John Swygert. "We saw comparable sales turn positive following steep declines mid-quarter, coinciding with the arrival of stimulus checks in addition to our communications to customers that we remain open and have great deals on items they need."

Net income was $33.5 million during the quarter, a decrease of 13.6%, or $0.51 per share. The company's net income during the prior year's quarter was $38.7 million.

Ollie's Bargain Outlet reported a 3.3% decrease in comparable store sales for the quarter. In addition, the company opened 17 new stores during the quarter, bringing the total number of stores to 360. Ollie's increased net sales were attributed to strong new store performance.

Williams-Sonoma Reports First Quarter Earnings

Williams-Sonoma, Inc. (WSM) reported its latest quarterly earnings on Thursday, May 28. The company posted better-than-expected sales and earnings.

Net revenue came in at $1.24 billion for the first quarter. This was relatively flat from $1.24 billion in revenue at this time last year, but higher than the $1.1 billion analysts expected.

"As the COVID-19 health crisis continues to impact our daily lives, our deep gratitude goes to all of the people who are taking care of our communities in the fight against this pandemic," said Laura Alber, President and CEO of Williams-Sonoma. "We also want to thank our associates for their agility, commitment and partnership in continuing to meet our customers' needs while prioritizing the health and safety of each other, our customers and our communities."

The company reported quarterly net earnings of $35.42 million, or $0.46 per share, exceeding analysts' estimates of $0.15 earnings per share. This was down from $52.66 million in net earnings, or $0.67 per share, during the same quarter last year.

Williams-Sonoma's Pottery Barn segment led the way with $480 million in net revenue, which represents a 1.1% decrease from comparable sales for the brand last year. Pottery Barn Kids and Teens accounted for the company's highest percentage increase in comparable sales, notching 8.5% growth over the prior year's quarter. The company's namesake brand, Williams Sonoma, experienced a 5.4% increase in sales to $199 million. Most of the company's stores were temporarily closed for most of the quarter, but the sales increases were driven by e-commerce revenue growth of over 30%.

Williams-Sonoma (WSM) shares ended the week at $83.21, up 18.2% for the week.

Dollar General Reports Strong Earnings

Dollar General Corporation (DG) posted its latest quarterly earnings on Thursday, May 28. The discount chain posted strong earnings for the quarter.

The company reported net sales of $8.45 billion during the first quarter. This was up 28% from $6.62 billion at the same time last year and exceeded analysts' expectations of $7.42 billion.

"These are certainly unprecedented times, and our hearts go out to everyone who has been affected by the COVID-19 pandemic," said Dollar General CEO Todd Vasos. "We are very grateful for those serving on the front lines, and particularly our store associates, distribution center employees and private fleet drivers for their incredible efforts."

Dollar General posted net income of $650.45 million for the quarter. This was up from $385.01 million in net income during the same quarter last year.

The company's same-store sales increased 21.7% from the same quarter last year, including increases to the average transaction amount and customer traffic. The home products category had the largest percentage increase in same-store sales. The Board of Directors issued a cash dividend of $0.36 per share for the second quarter of 2020.

Dollar General Corporation (DG) shares ended the week at $191.51, up 5.2% for the week.

The Dow started the week at 24,782 and closed at 25,383. on 5/29. The S&P 500 started the week at 3,004 and closed at 3,044. The NASDAQ started the week at 9,501 and closed at 9,490.

Treasury Yields Drop Further

Treasury yields fell on Friday in response to President Trump's press conference regarding China. On Thursday, unemployment data revealed over 40 million claims have been filed since mid-March.

On Friday, the President held a news conference on the topic of China, issuing a stark rebuke on the country's handling of the novel coronavirus. In response to the announcement of the conference, many investors fled to safe-haven assets fearing that existing tensions may be exacerbated by the press conference.

"We anticipate that Chinese policymakers would generally react proportionately or less-than proportionately to any further US actions," said Alec Phillips and Andrew Tilton of Goldman Sachs. "Recent US rhetoric on the virus and trade deal has been met mainly with rhetoric in return, rather than discrete policy actions."

On Thursday, the Labor Department reported an additional 2.1 million unemployment claims had been filed. The report marked the eighth consecutive week of decline in first-time jobless claims, falling from a peak of 6.9 million. Treasury yields moved higher in response.

"There was some good news in the continuing claims number, which tracks ongoing claims with a one-week delay," said Kevin Giddis, chief fixed-income strategist at Raymond James. "While it may be a stretch to call this 'good news,' it is certainly 'less bad,' and the markets are reacting in a positive way."

The 10-year Treasury note yield closed at 0.65% on 5/29, while the 30-year Treasury bond yield was 1.41%.

Mortgage Rates Sink Further

The 30-year fixed rate mortgage rate averaged 3.15%, down from 3.24% last week. At this time last year, the 30-year fixed rate mortgage averaged 3.99%.

This week, the 15-year fixed rate mortgage averaged 2.62%, down from 2.70% last week. Last year at this time, the 15-year fixed rate mortgage averaged 3.46%.

"The 30-year fixed-rate mortgage has again hit the lowest level in our survey's nearly 50-year history, breaking the record for the third time in just the last few months," said Freddie Mac's Chief Economist Sam Khater. "These unprecedented rates have certainly made an impact as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase as of last week—a remarkable turnaround given the sharp contraction in economic activity. Additionally, refinance activity remains elevated and low mortgage rates have been accompanied by a $70,000 decline in the average loan size of refinance borrowers this year. This means a broader base of borrowers are taking advantage of the record low rate environment, which will benefit the economy."

Based on published national averages, the savings rate was 0.06% for the week of 5/25. The one-year CD averaged 0.26%.